Denmark’s leading stock index has seen a significant downturn, plummeting 21% from its peak in September. This decline makes it the first major European index to officially enter a bear market, primarily influenced by escalating tariff risks and challenges faced by industry giant Novo Nordisk A/S. On Thursday, the OMXC25 Index experienced a 2.4% drop, mirroring trends in other key European stock markets following the announcement of extensive global tariffs by former US President Donald Trump.

Key Contributors to the Decline

Several factors have contributed to this substantial dip in Denmark’s stock index:

• Novo Nordisk’s Struggles: The company, which holds a significant position in the index, has seen its shares tumble by 25% this year. This decline is largely due to disappointing prescription numbers for its obesity treatments and setbacks in clinical trials.
• Impact of US Tariffs: The announcement of tariffs has created ripples across the economy, particularly affecting Denmark due to its reliance on exports, with nearly 20% of goods sold going to the US.
• Weak Performance of Other Companies: Noteworthy declines were also observed in the shares of logistics firm DSV A/S and jewelry manufacturer Pandora A/S, both of which contributed to the index’s downward trajectory.

Economic Insights

Investment economist Per Hansen from Nordnet AB commented on the situation, stating, “Denmark is a small open economy. When globalization thrives, it benefits Denmark — and the opposite is also true.” He emphasized the importance of Novo’s performance, especially given the recent high valuations of Danish stocks.

Disappointing Trial Results

Novo Nordisk recently concluded its worst month in over 20 years, exacerbated by poor sales trends in the US market. Additionally, disappointing results from clinical trials for their weight-loss drug monlunabant and another experimental treatment, CagriSema, have further impacted investor confidence.

Broader Market Challenges

The index’s struggles extend beyond Novo Nordisk. Other sectors, particularly in wind energy and renewables, are also facing challenges. Companies like Vestas Wind Systems A/S and Orsted AS have contributed to the overall decline.

Hansen remarked, “The OMXC25 is heavily influenced by life sciences and the green transition. Both sectors are encountering obstacles on their path.”

In light of these developments, investors are closely monitoring the situation as Denmark navigates through these turbulent economic waters.